Lawmakers grill AT&T, Time Warner execs on $85B merger

Lawmakers on Wednesday grilled the CEOs of AT&T and Time Warner on their proposed $85.4 billion merger during a hearing of the Senate Judiciary Committee’s antitrust panel.

Democrats raised concerns about the merger’s effect on consumers and expressed worries that it could result in higher prices and fewer options.

{mosads}AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes, however, insisted the deal would help AT&T provide lower rates to consumers and said they had “no incentive” to create more restrictive pricing and packing plans.

Stephenson cited AT&T’s previous merger with DirecTV, which he said had clearly benefitted consumers.

“We now offer 100 channels for $35 [on DirecTV],” the AT&T CEO said. “That is innovation that results in lower prices for consumers.”

AT&T’s proposed purchase of Time Warner, first announced in October, would link a telecommunications powerhouse with one of the country’s largest players in the entertainment industry. Time Warner includes many of the most popular networks and studios in the country, including HBO, CNN and Warner Brothers.

Democrats pressed the executives on whether the merger would give the companies an unfair advantage over their competitors.

“There would greater leverage in negotiation with content distributors as a result of this deal,” Sen. Al Franken (D-Minn.) said to the executives. “Do you think AT&T would benefit from using this as leverage?”

But the executives insisted that the merger was needed to help the companies keep up with an already competitive marketplace.

“We don’t have the market power to do that,” Bewkes responded. “The market is too competitive for that.”

While Franken and Democrats expressed skepticism at the executives arguments in favor of the merger, Republicans appeared to be more sympathetic.

Sens. David Perdue (R-Ga.) and Thom Tillis (R-N.C.) defended the merger.  

“It’s not a consolidation,” said Perdue. “We need to remember that as a committee. Vertical integration is nothing new.”

“It’s capitalism,” he added.

Many consumer groups have expressed concerns about the merger.

Gene Kimmelman, CEO of Public Knowledge, a public interest group dealing with market competition issues, said it would give AT&T an unfair advantage over content providers.

“There has been a history of this kind of favoritism and discrimination,” he testified before the panel.

Kimmelman also dismissed comparisons of the AT&T-Time Warner proposal with AT&T’s merger with DirecTV.

“In the DirecTV deal, there were clear efficiencies,” Kimmelman told the panel. “I am extremely pleased to see … companies take advantage of those efficiencies and offer lower prices. I don’t see that opportunity here.”

AT&T and Time Warner also had some high-profile defenders at the hearing.

Billionaire investor Mark Cuban, who testified, said the merger was necessary for the companies to remain competitive in a changing media landscape.

“This merger is not only one of survival and opportunity, but also needed for consumers. We need more companies that can compete with Amazon, Apple, Google, Microsoft and Facebook,” Cuban said.

“Alone, it would be very difficult if not impossible to compete with the companies I just mentioned.”

Looming over the proposed merger is the election of Donald Trump. The president-elect on the campaign trail criticized the merger, saying that he wouldn’t approve it if he was in office. Trump said such mergers tied up too much power in the hands of a few companies.

During the hearing, Stephenson told the panel that he not been in contact with the president-elect.

The hearing was the first opportunity for lawmakers to weigh in on the merger proposal, which faces a long path and will come under tough scrutiny from regulators, including the Justice Department.

The Federal Communications Commission could also end up conducting its own review if AT&T decides to keep Time Warner’s broadcasting licenses.

Stephenson said in the hearing that AT&T is currently reviewing the licenses to determine their plans.